OpenReference

Cost of Goods Sold measures the expense a company incurred in order to acquire, manufacture or create a sellable product. It includes the purchase price of the raw materials as well as the expenses of turning it into a sellable product.

Calculation

Cost of Goods Sold
=	Direct Materials + Direct Labor + Overhead   × 100 % Revenue

where

• Direct Materials = Total annual cost of materials to generate the revenue
• Direct Labor = Total annual personnel cost to generate the revenue
• Overhead = Total annual manufacturing (Source + Make) overhead cost
• Revenue = Total annual revenue from sales of products and services

Unit of measure: %

Importance

A lower number of days indicate better control of the costs to source and make sellable products/services.

Alternative names include: Cost of Revenue and Cost of Sales. Statement of Comprehensive Income

Community Importance Rating:

3.50

(2 votes)

Hierarchy

ID	Name	Level	x
CO1	Supply Chain Costs	1	CO1
CO11	Cost of Goods Sold	2	CO11
CO111	Direct Material Costs	3	CO111
CO112	Direct Labor Costs	3	CO112

Process(es)

ID	Name	Level	x
P1	Plan Supply Chain Operations	2	P1
P101	Gather Demand Forecast	3	P101
P2	Plan Source	2	P2
P203	Calculate Sourcing Plan	3	P203
P3	Plan Make	2	P3
P303	Calculate Production Plan	3	P303
S006	Negotiate	3	S006
S1	Source-to-Replenish	2	S1
S102	Receive	3	S102
S10201	Schedule Appointment	4	S10201
S10202	Check-In	4	S10202
S10203	Queue Activities	4	S10203
S10204	Inspect Vehicle	4	S10204
S10205	Weigh-In	4	S10205
S103	Unload	3	S103
S104	Inspect	3	S104
S2	Source-to-Order	2	S2
S201	Create Order	3	S201
S203	Receive	3	S203
S204	Unload	3	S204
S205	Inspect	3	S205
S3	Source-to-Engineering-Order	2	S3
S302	Negotiate & Award	3	S302
S303	Create Order	3	S303
S304	Receive	3	S304
S305	Unload	3	S305
S306	Inspect	3	S306
M1	Make-to-Stock	2	M1
M2	Make-to-Order	2	M2
M204	Produce	3	M204
M3	Make-To-Engineering-Order	2	M3
M302	Complete Order Engineering	3	M302
M305	Produce	3	M305
M309	Transfer	3	M309
M4	Re-Make	2	M4
M401	Create Work Order	3	M401
M402	Schedule Work Orders	3	M402
M405	Issue Material	3	M405
M410	Transfer	3	M410
D203	Route & Schedule Order	3	D203
D304	Schedule Project Resources	3	D304

Term(s)

ID	Name	Clear	x
EPS	Earnings per Share		EPS
IFRS	International Financial Reporting Standards		IFRS
CSCI	Statement of Comprehensive Income		CSCI
SCF	Supply Chain Finance		SCF

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